UC leaders and analysts warn federal research and health funding shifts could strain campuses

Legislative Analyst Florence Bouvet and University of California representatives briefed the subcommittee on federal funding's role in UC finances and the risks posed by recent federal policy proposals and legislation.

Bouvet said federal funds account for roughly one‑third of UC funding and that in 2024-25 UC received more than $19 billion in federal funding. Most federal funding supports three areas: medical center patient care, research and student financial aid. She noted that recent federal policy changes are affecting those areas in different ways and pointed committee members to more detailed LAO tables on the office's website.

Seiya Vertanen summarized the university's concerns: federal research funding had become unpredictable, immigration and H‑1B changes complicated international collaboration, and UC had already seen some research grant cancellations and suspensions (he reported about $172 million canceled or suspended and another $800 million tied up in litigation). He warned that HR1 imposes new paperwork and work requirements that could reduce Medi‑Cal participation and that reductions in FMAP and elimination of the MCO tax would reduce payments that support UC academic health centers.

Vertanen told the committee that these changes would not only affect research but also UC medical centers, which serve as safety‑net hospitals and deliver inpatient and specialty care across the state; he said UC academic health centers provide key services in many regions and that reductions in federal support translate into increased uncompensated care and pressure on other campus services.

Committee members asked about the immediate impacts on students and campus operations. Vertanen said he did not have an exact percentage for graduate students losing research positions but noted there are about 1,600 research projects currently impacted; he warned that research disruption is difficult to restart and can erase years of progress.

The committee requested further monitoring and collaboration between the administration, Department of Finance and UC to quantify likely impacts and to identify mitigations. Department of Finance said it is in regular contact with UC to monitor potential losses and coordinate on responses.